4 Ways to Recognize and Avoid an Underperforming Channel Partner Program

Inherent in a distributor sales force model is a lack of communication and understanding between separate entities on the status of their leads and sales pipelines.

Manufacturers send leads to their distributors, but rarely get feedback on what happens with those leads, the opportunities they represent, forecasted sales, or the pipeline as a whole.

In fact, our manufacturer clients report that they only hear back on 10 to 20 percent of their leads. Was the lead contacted by the distributor? How long did it take? Did an opportunity or sale result? These are questions that often go unanswered. That’s largely because manufacturers don’t have an effective process or the right tools in place to facilitate two-way communication.

It’s not something to ignore.

Up to 80 percent of the leads passed to sales fall through the cracks, according to the American Marketing Association. Depending on the product, that is thousands to millions of dollars in lost sales each week. Additionally, Gartner Research reports that 43 percent of sales go to the company that follows up first on the lead. So it’s imperative that distributors know which leads they’ve received, and then act quickly, or both parties risk losing even more.

How do you know if your channel business is leaving money on the table? Here are the 4 most common red flags, and steps you can take to improve channel performance.

1. Leads are not contacted fast enough

Sales managers know that speed-to-contact rates are a proven performance indicator. Faster speed-to-contact rates lead to higher conversion, which is why most companies should aim to speed up the lead capture and distribution process. Now, more than ever, prospects demand a quick response.

The problem that channel sellers face is the disconnect (and often slowdown) between their lead capture process, which may include reformatting or lead qualification, and the time it takes for the appropriate distributor to receive the lead and follow-up.

If speed-to-contact is a concern for your organization, be intentional about how you share leads and how those leads are received and organized. The best case scenario is an integrated system that allows you to quickly and easily capture and share leads so that your partners have the opportunity to follow-up with prospects faster.

2. Leads are poorly qualified

One manufacturer told me recently that the No. 1 complaint he hears from outside sales reps is lead quality. “For every 100 leads we receive, only a handful are worth following up,” he recounted.

If your incoming sales leads are missing critical contact details as well as valuable market details, such as SIC code/description, company size, website, address, etc., your distributors are either wasting valuable time trying to collect these details or are not as prepared as they should be with a potential customer.   

Lead scoring should give distributors the information they need to personalize their sales pitch to customers. The scores also determine which nurture campaigns to place your leads in and the best time for channel partners to engage with those leads. And the more you are able to prioritize quality leads over cold leads, the faster you and your channel partners will see conversion rates increase.

3. Your pipeline is fuzzy

Does your current system give you an accurate, real-time picture of your sales pipeline, as well as future sales projections? What’s your cost of customer acquisition, and your conversation rates by distributor? It’s difficult to measure, plan and improve sales without tools that deliver this kind of business-critical information.

The good news is that you don’t need to spend more on generating new leads. Rather, focus on maximizing the revenue potential that already exists among your current leads.

A software program that automates the lead capture and distribution process can help manufacturers clearly understand what is happening with their leads. Manufacturers can confirm that leads are being followed up by distributors and identify how quickly that happens. The lead generator can also see the opportunities and sales projections in the pipeline.

Such information can then inform data-driven decisions that increase revenue, whether it’s promoting a high-performer, offering additional support to a sales rep or determining the most effective leads sources.

4. Distributor engagement is lukewarm

The nature of the relationship between manufacturers and distributors creates a significant engagement hurdle. Manufacturers have tried to solve this problem with CRM (Customer Relationship Management) programs, but CRMs have proven inadequate, if downright un-useful for the channel seller. Why?

Because distributors — who routinely partner with multiple manufacturers — don’t want to learn how to use 20 different systems and keep track of 20 different login details. It’s a huge hassle, so they just don’t use it.

The key to better distributor engagement — and therefore increased productivity — is to simplify the feedback process. Look for software products that eliminate the login process for distributors entirely. Instead, the solution should present the distributor with the data they need via a secure, encrypted Web interface. This allows distributors to quickly and easily provide feedback on leads without the hassle of responding to individual emails or learning several CRMs.

Spotty feedback about sales leads and sporadic communication with distributors has long been the norm for many manufacturers. But given the technology now available, there’s no reason it needs to stay that way. Organizations that address these four problem areas — contact rates, lead quality, pipeline visibility, and distributor engagement — yield worthwhile results, including 20 percent increased revenue and up to 300 percent increased distributor engagement.